Diabetes mellitus is a significant health problem, affecting approximately 16 million people in the United States. Loss of sufficient insulin production by the pancreatic islet beta cell is a hallmark of both type I and type II diabetes. Replacement of these cells through regeneration or transplantation could offer lifelong treatment for diabetics. However, a major problem in implementing treatment is the lack of sufficient islet cell tissue for transplantation. It has been reported that in the U.S. only about 3,000 human donor pancreases are available each year, yet over 35,000 new cases of type I diabetes are diagnosed each year. There is a continuing need for a method of treating a diabetic patient by transplantation of cells that will function as insulin-producing pancreatic islet cells.